Note 9: Income Taxes

The following table summarizes the current and deferred components of income tax expense (benefit) for each of the three years ended December 31:

		2016		2015		2014
Current
Federal	$	5,189	$	5,607	$	5,411
State		217		218		263
		5,406		5,825		5,674
Deferred		470		142		240
	$	5,876	$	5,967	$	5,914

The following table reconciles the expected federal income tax expense (computed by applying the federal statutory tax rate of 35%) to recorded income tax expense, for each of the three years ended December 31:


		2016					2015					2014

Computed tax expense	$	7,283		35.00	%	$	7,392		35.00	%	$	7,184		35.00	%
Increase (reduction) in income taxes
resulting from:
Officers' life insurance		(244	)	-1.17	%		(209	)	-0.99	%		(88	)	-0.43	%
Tax exempt interest		(1,388	)	-6.67	%		(1,303	)	-6.17	%		(1,325	)	-6.44	%
Acquisition costs		289		1.39	%		--		0.00	%		--		0.00	%
State taxes, net of federal benefit		141		0.68	%		142		0.67	%		171		0.83	%
Other		(205	)	-0.99	%		(55	)	-0.26	%		(28	)	-0.22	%
	$	5,876		28.24	%	$	5,967		28.25	%	$	5,914		28.74	%

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are summarized below. The net deferred tax asset, which is included in other assets, amounted to $5,990 at December 31, 2016 and $2,174 at December 31, 2015.


		2016				2015
		Asset		Liability		Asset		Liability
Allowance for possible losses on
loans and other real estate owned	$	3,733	$	--	$	3,379	$	--
Deferred compensation		1,018		--		1,035		--
Unrealized gain or loss on securities
available for sale		1,144		--		--		3,076
Unrealized gain or loss on derivatives		968		--		873		--
Unfunded post-retirement benefits		219		--		249		--
Depreciation		--		537		--		615
Deferred loan origination costs		--		517		--		475
Other real estate owned		12		--		22		--
Non-accrual interest		215		--		211		--
Write down of impaired investments		626		--		1,113		--
Branch acquisition costs & goodwill		--		760		--		639
Prepaid expenses		--		275		--		151
Interest rate cap premium amortization				352				200
Equity compensation		310		--		253		--
Other		187		1		198		3
	$	8,432	$	2,442	$	7,333	$	5,159

The Company has determined that a valuation allowance is not required for its net deferred tax asset since it is more likely than not that this asset is realizable principally through the ability to carry-back to taxable income in prior years, future reversals of existing taxable temporary differences, and future taxable income.